tax

A charge by the government on the income of an individual, corporation, or trust, as well as the value of an estate or gift. The objective in assessing the tax is to generate revenue to be used for the needs of the public. A pecuniary burden laid upon individuals or property to support the government, and is a payment exacted by legislative authority. In re Mytinger, D.C.Tex., 31 F.Supp. 977, 978, 979.

Essential characteristics of a tax are that it is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority. Michigan Employment Sec. Commission v. Patt, 4 MickApp. 228, 144 N.W.2d 663, 665.

Annual compensation paid to government for annual protection and for current support of government. Alabama Power Co. v. Federal Power Commission, C.C.A.5, 134 F.2d 602, 608.

A ratable portion of the produce of the property and labor of the individual citizens, taken by the nation, in the exercise of its sovereign rights, for the support of government, for the administration of the laws, and as the means for continuing in operation the various legitimate functions of the state. An enforced contribution of money or other property, assessed in accordance with some reasonable rule or apportionment by authority of a sovereign state on persons or property within its jurisdiction for the purpose of defraying the public expenses.

In a general sense, any contribution imposed by government upon individuals, for the use and service of the state, whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name. And in its essential characteristics is not a debt. City of Newark v. Jos. Hollander, Inc., 136 N.J.Eq. 539, 42 A.2d 872, 875.

See also accumulated earnings tax

- estate tax

- estimated tax

- excess profits tax

- excise tax

- gift tax

- holding company tax

- income tax

- inheritance tax

- intangibles tax

- investment tax credit

- levy

- license fee or tax

- occupation tax

- payroll tax

- poll-tax

- progressive tax

- property tax

- regressive tax

- sales tax

- service occupation tax

- surtax

- taxation

- toll

- transfer tax

- undistributed profits tax

- use tax

- withholding.

Synonyms

In a broad sense, taxes undoubtedly include assessments, and the right to impose assessments has its foundation in the taxing power of the government; and yet, in practice and as generally understood, there is a broad distinction between the two terms.

"Taxes," as the term is generally used, are public burdens imposed generally upon the inhabitants of the whole state, or upon some civil division thereof, for governmental purposes, without reference to peculiar benefits to particular individuals or property.

"Assessments" have reference to impositions for improvements which are specially beneficial to particular individuals or property, and which are imposed in proportion to the particular benefits supposed to be conferred. They are justified only because the improvements confer special benefits, and are just only when they are divided in proportion to such benefits. As distinguished from other kinds of taxation, "assessments" are those special and local impositions upon property in the immediate vicinity of municipal improvements which are necessary to pay for the improvement, and are laid with reference to the special benefit which the property is supposed to have derived therefrom. Taxes differ from subsidies, in being certain and orderly, and from forced contributions, etc., in that they are levied by authority of law, and by some rule of proportion which is intended to insure uniformity of contribution, and a just apportionment of the burdens of government.

@ bracket creep

The process by which inflation pushes income earners into higher marginal tax brackets. The significance of the bracket creep changed with the Tax Reform Act of 1986 which substantially reduced the number of brackets.

+ bracket creep

The process by which inflation pushes individuals into higher tax brackets.

@

- capital gains tax

- capital stock tax

@ collateral inheritance tax

A tax levied upon the collateral devolution of property by will or under the intestate law

@ consumption tax

Tax imposed on sales of consumption goods and services.

@ customs tax

See customs duties.

@

- estate tax

- excess profits tax

@ flat tax

Tax imposed at same rate to all levels of income.

+ flat tax

In its pure form, a flat tax would eliminate all exclusions, deductions, and credits and impose a onerate tax on gross income.

See also tax

@ floor tax

A tax on all the distilled spirits "on the floor" of a warehouse, i.e., in the warehouse.

@

- franchise tax (See also franchise)

@ graduated tax

A tax so structured that the rate increases as the amount of the income or value of the property increases.

+ graduated tax

Tax structured so that the rate increases as the amount of income of taxpayer increases

@ gross receipts tax

A tax based on total sales rather than on net profits.

See also gross income tax.

@ head tax

A flat tax imposed on a per person basis.

+ head tax

Tax of flat amount per person

@

- income tax

- inheritance tax

- estate tax.

- land tax

- ad valorem tax

- property tax.

@ license tax.

See license fee or tax.

@ local taxes

Taxes imposed by municipalities such as local property taxes or city income or sales taxes. payroll tax

A type of tax which is collected by deduction from an employee's wages. Federal, state and half of the social security tax is paid by employees, with the social security tax matched by the employer.

@ personal property tax

A tax assessed against personal property by cities and towns. The tax is commonly referred to as an excise tax and is levied against such items as automobiles, boats, etc.

+ personal property tax

Tax on such items of personal property as household furniture, jewelryr etc. levied by local or state governments

@ real estate tax

Tax levied by local taxing authority against the ownership of real estate for purposes of financing the operations of the local government.

See also ad valorem tax

- property tax.

- poll-tax

- progressive tax

Compare regressive tax, below.

@ property tax

Generic term describing a tax levied on the basis of the value of either personal or real property owned by the taxpayer.

See also ad valorem tax

- real estate tax,

+ property tax

An ad valorem tax, usually levied by a city or county government, on the value of real or personal property that the taxpayer owns on a specified date. The tax is generally expressed as a uniform rate per thousand of valuation.

@ proportional taxes

Taxes are "proportional" when the proportion paid by each taxpayer bears the same ratio to the amount to be raised that the value of his property bears to the total taxable value, and in the case of a special tax when that is apportioned according to the benefits received.

@ regressive tax

A tax system in which higher-income groups pay a smaller percentage of their income to taxes than do lower-income groups; that is, the marginal rate is below the average rate. The average rate falls as income increases

Compare progressive tax.

+ regressive tax

A tax levied at rates which increase less rapidly than the increase of the tax base, thus bearing more heavily on poorer taxpayers. Tax for which the rate decreases as the taxed base, such as income, increases

@

- sales tax

@ severance tax

Tax levied on the mining or extraction of some natural resource such as oil or coal. It may be assessed on the value of the product extracted or on the volume.

+ severance tax

A tax on mineral or forest products at the time they are removed or severed from the soil and usually regarded as a form of property taxation. Excise taxes upon privilege or right to sever natural resources from soil and are paid by owner of resource at time it is produced. United Gas Pipe Line Co. v. Whitman, La. App., 390 So.2d 913, 918

@

- sinking fund tax (See also fund)

@ specific tax

A tax imposed as a fixed sum on each article or item or property of a given class or kind, without regard to its value (e.g. sales tax); opposed to ad valorem tax.

@ stamp tax

Tax collected through the sale of stamps which must be affixed to certain documents such as deeds, stock certificates, etc.

See revenue stamps.

+ stamp tax

The cost of stamps which are required to be affixed to legal documents such as deeds, certificates, and the like.

See documentary stamp

- revenue stamps

- stamp

- stamp duties

@ stock transfer tax

Tax levied by the federal government and by certain states on the transfer or sale of shares of stock.

+ stock transfer tax

A tax imposed on the transfer of stock and based on the market value of the stock

@

- succession tax; succession duty or tax.

Surtax. An additional tax imposed on incomes exceeding a specified amount.

See also surtax, tax abatement.

See abatement

@ tax assessment

The value given to the property which is being taxed. Multiplying the assessed valuation by the tax rate yields the tax paid.

See also assessment

@ tax certificate

A certificate of the purchase of land at a tax sale thereof, given by the officer making the sale, and which is evidence of the holder's right to receive a deed of the land if it is not redeemed within the time limited by law

+ tax certificate

Instrument issued to the buyer of property at a tax sale which entitles the holder to the property thus purchased if it is not redeemed within the period provided by law.

See also tax deed

@ tax-deed

@ tax deed

The deed given upon a sale of real property made for non-payment of taxes. The deed whereby the officer of the law undertakes to convey the title of the property to the purchaser at the tax-sale.

+ tax deed

A proof of ownership of land given to the purchaser by the government after the land has been taken from another person by the government and sold for failure to pay taxes.

See also tax certificate

- tax title

@ tax deficiency

See deficiency assessment

@ taxing district

The district throughout which a particular tax or assessment is ratably apportioned and levied upon the inhabitants; it may comprise the whole state, one county, a city, a ward, or part of a street

@ tax lease

The instrument (or estate) given to the purchaser of land at a tax sale, where the law does not permit the sale of the estate in fee for non-payment of taxes, but instead thereof directs the sale of an estate for years

@ tax levy

The total sum to be raised by a tax.

Also the bill, enactment, or measure of legislation by which an annual or general tax is imposed.

See also assessment

- levy

+ tax levy

The order for payment of taxes. Also, the determination of the total receipts to be collected by the tax.

@

- tax lien

@ taxpayer

A person whose income is subject to taxation; one from whom government demands a pecuniary contribution towards its support

+ taxpayer

One who is subject to a tax on income, regardless of whether he or she pays the I.R.C. No. 7701(aXU)

@ taxpayers' lists

Written exhibits required to be made out by the taxpayers resident in a district, enumerating all the property owned by them and subject to taxation, to be handed to the assessors, at a specified date or at regular periods, as a basis for assessment and valuation.

See also roll (tax roll)

@

- tax roll (See roll)

@ tax sale

Sale of property for nonpayment of taxes.

See also tax certificate; sale

@ tax-title

The title by which one holds land which he purchased at a tax sale. That species of title which is inaugurated by a successful bid for land at a collector's sale of the same for nonpayment of taxes, completed by the failure of those entitled to redeem within the specified time, and evidenced by the deed executed to the tax purchaser, or his assignee, by the proper officer

@ tonnage tax

See tonnage-duty

@ undistributed profits tax

A tax imposed on the accumulated surplus of specific types of corporations when such surplus reaches a certain level. The objective of such a tax is to discourage the formation of a corporation for the purpose of preventing the imposition of an income tax on the shareholder through accumulated earnings instead of making distributions through dividends. I.R.C. No. 531.

See accumulated earnings tax.

+ undistributed profits tax

Tax imposed on the unreasonable accumulation of profits by a corporation which has sufficient surplus for expansion and other needs beyond the amount which it could but does not pay out in dividends. I.R.C. No. 531 et seq.

@ unemployment tax

Tax required by the Federal Unemployment Tax Act (FUTA) to cover the cost of unemployment insurance. The federal statute provides for a tax based on a percentage of employee earnings but allows a credit for amounts paid in state unemployment taxes.

@ unitary tax

A method of determining the locally taxable income of businesses that transact business with affiliated companies outside the state. Alcan Aluminum Ltd. v. Franchise Tax Bd. of State of Calif., 860 F.2d 688, 690.

See also tax

- unitary business

- unitary theory.

@ use tax

Tax generally imposed by a state on the use of certain goods which are not subject to a sales tax. It is commonly designed to discourage people from going out of state and purchasing goods which are not subject to sales tax at the point of purchase.

+ use tax

A sales tax that is collectible by the seller where the purchaser is domiciled in a different state. A tax on the use, consumption, or storage of tangible property, usually at the same rate as the sales tax, and levied for the purpose of preventing tax avoidance by the purchase of articles in a state or taxing jurisdiction which does not levy sales taxes or has a lower rate. A levy on privilege of using, within taxing state, property purchased outside the state, if the property would have been subject to the sales tax had it been purchased at home. King v. L & L Marine Service, Inc., Mo., 647 S.W.2d 524, 526.

Such tax ordinarily serves to complement sales tax by eliminating incentive to make major purchases in states with lower sales taxes; it requires resident who shops out-of-state to pay use tax equal to sales tax savings. Minneapolis Star and Tribune Co. v. Minnesota Com'r of Revenue, U.S.Minn., 460 U.S. 575, 103 S.Ct. 1365, 1370, 75 L.Ed.2d 295

@ value-added tax

(VAT).

A tax assessed on goods and services on the value added by each producing unit. The value added is generally the sum of all wages, interest, rent, and profits. Otherwise stated, it is the total sale price of output minus the cost of raw materials and intermediate goods purchased from other firms. The amount of the tax is a percentage of the value of the goods or services. Such a tax exists in many European countries, but not as yet in the U.S.

@ withholding tax

A tax which is collected by deducting it from the wages of an employee, e.g. federal income taxes.

See also payroll tax

@